Canada strikes back at US with retaliatory tariffs as trade war
escalates
[August 26, 2026] By
ROB GILLIES
TORONTO (AP) — Canada struck back at the United States on Tuesday with
retaliatory tariffs on about $20 billion worth of American goods,
including steel, dairy products, appliances and farm equipment, as the
trade war between the once-friendly neighbors escalated sharply.
The confrontation threatened one of the world’s largest trading
relationships and further strained ties between the United States and a
country long considered one of its closest allies. A prolonged dispute
could raise costs for American businesses and consumers less than 2½
months before the midterm elections.
The new tariffs extended well beyond industrial goods, hitting everyday
purchases such as seafood, cheese, clothing, cosmetics and toilet paper,
with some facing duties as high as 50%.
“We did not choose this conflict, but when our economic integration is
used as a weapon rather than the foundation for a win-win partnership,
we need to stand up,” Finance Minister François-Philippe Champagne said
in French, calling the situation "an unprecedented challenge imposed on
Canada.”
Industry Minister Mélanie Joly urged Canadians to buy Canadian goods,
saying doing so would help protect jobs and launch a “movement of
resistance.” She said the tariffs would put pressure on particular U.S.
states.
A senior Canadian official said Ottawa did not design the new measures
around the U.S. electoral map, unlike during Trump’s first term, when
retaliatory tariffs were crafted to hit politically sensitive products.
Back then, Canada targeted U.S. yogurt that came largely from Wisconsin,
then-House Speaker Paul Ryan’s home state, as well as whiskey from
Kentucky, home state of then-Senate Republican leader Mitch McConnell.
The official, speaking on condition of anonymity to discuss the
government’s strategy, said the new tariffs were chosen primarily to
match U.S. measures and put pressure on American industries and supply
chains, with state-level political effects a secondary consideration.
Canada’s retaliation came after the Trump administration imposed 50%
tariffs over the weekend on Canadian goods following the collapse of
trade negotiations. Canadian Prime Minister Mark Carney accused
Washington of trying to subordinate Canada and said U.S. demands during
the failed talks showed that Americans wanted to “destroy our major
industries.”
Trump told Canadian leaders to ‘fall in line’
Trump intensified the confrontation Monday, telling Canadian leaders to
“fall in line” or face consequences “far WORSE” than existing tariffs
and threatening new 50% tariffs on Canadian vehicles, auto parts and
steel.
Trump added another provocation Tuesday, saying the United States was
giving “serious consideration” to renaming Lake Ontario “Lake America”
in a feud with Ontario Premier Doug Ford. Such a change would be
reminiscent of the Republican president’s executive order last year to
rename the Gulf of Mexico to the Gulf of America.
In the hours before Canada's announcement, Trump went on a social media
tear against the country, accusing it of ripping off American farmers
and driving American companies out of business.
“I deal with many countries, and Canada is easily the most difficult and
unreasonable,” Trump wrote in one post. “They feel entitled, but they
are not a State, and will be entitled no longer!”
Because the Supreme Court struck down his biggest tariffs in February,
the president turned this time to an obscure provision of a
Depression-era trade law that gives him the power to impose tariffs of
up to 50% on imports from countries that have discriminated against U.S.
businesses. No president has ever imposed such tariffs before, so they
are untested in court.
Tariffs on many US products would double
The tariffs will take effect Sept. 8 at rates of 15%, 25% and 50%, with
Canada matching the corresponding U.S. tariff rate on more than 700
products. The tariffs on many American products would double from 25% to
50%, with the largest share of the new measures affecting steel and
aluminum.
Canadian officials said the goal is not to raise revenue but to protect
Canadian companies and reduce U.S. imports.
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Minister of Finance and National Revenue Francois-Philippe Champagne
speaks at a news conference on Canada's response to U.S. tariffs, at
a roofing company in Ottawa, on Tuesday, Aug. 25, 2026. (Justin
Tang/The Canadian Press via AP)
 U.S. steel imports, for example,
have already fallen 30% since Canada imposed a 25% tariff, and the
new 50% rate is expected to cut them further, Canadian officials
said.
Goods facing 50% tariffs include some steel and aluminum products,
furniture and clothing. Appliances, dairy products including cheese,
fish and seafood, and certain steel and aluminum derivatives will
face 25% tariffs. Existing Canadian countertariffs on U.S. autos
will remain in place.
Canada also announced a support package for workers and businesses
affected by the dispute worth $7.5 billion in Canadian dollars ($5.4
billion in U.S. dollars).
Canadian officials acknowledged the countertariffs will raise costs
for some businesses and consumers but said they expect the overall
economic effects to be moderate.
British Columbia Premier David Eby backed Carney, arguing that any
agreement with Trump would have been unstable.
"Any agreement that would have been signed with this president
wouldn’t have lasted as long as it took him to write a signature,”
Eby said. “This is the president that would have signed the deal and
then turned around and called it the worst deal.”
He said he hoped countries such as Mexico, which is also negotiating
with Washington, would “join us and say enough is enough."
Countries have integrated supply chains
Canada and the United States have deeply integrated supply chains
across the auto, energy, agriculture and manufacturing industries,
making a prolonged trade fight potentially costly for businesses and
workers on both sides of the border.
Businesses and consumers are caught in the middle, facing
uncertainty about how much prices may increase.
Michael Howard II, owner of a furniture business in Warren,
Michigan, outside Detroit, said the tariffs will hamper the “ability
for us to put food on the table for our family" and affect "the
ability for us to give back to our community.”
Howard and his wife started their business a decade ago.
“To say that we don’t need Canada is just disingenuous,” he said.
“It’s dishonest. And it’s just absolutely not truthful. We need our
neighbor, but also they need us.”
On Monday, Carney said U.S. negotiators had raised objections to
French-language content on streaming platforms and French-language
labeling rules. He rejected the idea that those issues were
negotiable, saying in French: “For the Americans, questions about
the French language, Quebec culture, francophone culture and
Canadian culture are irritants. Here in Quebec, here in Canada, they
are rights."
In a social media post early Tuesday, Trump wrote: “I would never
interfere with Canadians speaking French! In fact, I have never even
thought of doing such a stupid thing. This lie was made up by a weak
and ineffective Prime Minister in an attempt to gain political
support, which he has totally lost, from the people of Quebec."
___
Associated Press writers Seung Min Kim in Washington and Mike
Householder in Warren, Michigan, contributed to this report.
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